7. The Regional Action policy scenario

The results from the Baseline scenario outlined in Part I highlight how socioeconomic developments, economic activity (Chapter 2), plastics use (Chapter 3), plastic waste (Chapter 4) and plastic leakage (Chapter 5) are intrinsically linked. These links can be weakened or even broken by making plastics use more circular – i.e. by using more recycled plastics – and by improving how we deal with any remaining plastic waste. Achieving this requires a comprehensive set of policies.

This chapter explores the consequences of a Regional Action policy scenario, in which a policy package is implemented to reduce plastic leakage to the environment and to enhance the circularity of plastics use throughout their lifecycle. The policy package builds on the policy roadmap presented in the OECD Global Plastics Outlook: Economic drivers, environmental impacts and policy options (OECD, 2022[1]), and addresses each step of the plastic lifecycle, from production, use and reuse to waste management – including recycling. It involves a gradual approach that can be implemented over time to achieve increasingly ambitious policy objectives (Figure 7.1).

The Regional Action policy package models the roll-out from 2022 (or in some cases from 2030) of flagship instruments put forward in the policy roadmap while taking into account the differences in capabilities across regions and the complexity of ramping up policy ambition. For example, not all countries can be expected to put in place advanced Extended Producer Responsibility (EPR) schemes (Box 7.1). Furthermore, the European Union has already advanced legislative action to implement plastics taxes, so is in a better position to quickly ramp these up than other countries. And countries that currently have very low recycling rates cannot be expected to reach the same targets as countries that already have set up high-capacity recycling facilities, not least the European Union and he OECD Pacific countries (Japan and Korea). In contrast, some technological advances, such as improved design for durability and reparability, can diffuse globally once they have reached a certain level of maturity.

In this Regional Action scenario, OECD countries undertake ambitious action, while non-OECD countries undertake more moderate action. Although these policies are aimed at reducing leakage of plastic to the environment significantly, they fall short of completely eliminating plastic leakage to the environment. Chapter 8 focuses on a more ambitious policy package, which aims at achieving global ambitions to reduce plastics leakage to the environment.

The Regional Action policy package includes a range of policy instruments, grouped into three main pillars (Figure 7.2). The various policies are designed to work together, rather than independently (see Annex B for details of the modelling):

  • Restrain plastics production and demand and enhance design for circularity:

    • A tax on plastic packaging, increasing linearly from 0 in 2021 to reach USD 1 000/tonne by 2030 in the European Union (EU), by 2040 in the rest of the OECD and by 2060 in (non-EU) non-OECD countries.1 It remains constant thereafter.

    • A tax on the use of all other types of plastics, introduced after 2030, starting at USD 25/tonne and reaching USD 750/tonne by 2040 in OECD countries and by 2060 in non-OECD countries. It remains constant thereafter.

    • Policy instruments to increase circularity and encourage more durable and repairable design of plastics. This includes (i) an extension of product lifespans by 10% to reflect durability, (ii) a decrease in intermediate (i.e. industrial and commercial) and final demand for durables of 5-10% by 2040 to reflect the longer lifespans of products, (iii) an increase in the demand for repair services calibrated such that overall household and government expenditures are unaffected by the policy. These policies are applied globally.

  • Enhance recycling:

    • Recycled content targets, modelled through a tax on primary plastics combined with a subsidy on secondary plastics, as a proxy for regulation to achieve the targeted share of secondary in total production of plastics. OECD countries target 40% recycled content by 2060 and non-OECD countries 20%.

    • Extended producer responsibility (EPR; see Box 7.1), implemented by OECD and non-OECD EU countries for all packaging, electronics, motor vehicles and clothing; the remaining countries do not implement EPR.

    • Region-specific recycling rate targets; 60% by 2030 and 70% by 2060 for EU and the OECD Pacific region; 60% recycling by 2060 for other OECD countries and China; 40% by 2060 for the other countries. As with the EPR, the associated investment needs are included in the model.

  • Close leakage pathways:

    • Public investment in mixed waste collection and sanitary landfills; this allows OECD countries to eliminate all mismanaged collected waste (e.g., dumped or burned in open pits) by 2060, and non-OECD countries to halve their share of mismanaged waste by 2060.

    • Policies to improve litter collection: litter collection rates increase more rapidly with income and reach 90% for high income countries (versus 85% in the Baseline scenario)

The Regional Action scenario reduces plastics quantities throughout the plastic lifecycle compared to the Baseline scenario, including plastics use, waste generation and mismanaged waste (Figure 7.3).

Globally, plastics use is projected to fall by 18% below the Baseline projection, reaching 1 018 million tonnes (Mt) in 2060 instead of 1 231 Mt (Panel A in Figure 7.3). It still represents a more than doubling from the 460 Mt in 2019. Most of the decrease in plastics use is, as expected, achieved by restraining demand (175 Mt of plastics use is avoided), mainly by taxing plastics use. Plastics use also decreases thanks to policies that aim at improving product design for circularity, such as increasing product lifespans and enhancing reuse. These policies prolong the lifespan of durable goods, reducing their demand. Downstream policies aimed at improving plastic waste management, including enhancing recycling and closing leakage pathways, have little effect on plastics production and use, although enhancing recycling does induce a switch in production from primary to secondary plastics.

Plastic waste generation is projected to decrease by a similar percentage (-18%), reaching 837 Mt by 2060, compared to 1 014 Mt in the Baseline (Panel B). As eventually all plastics that are used end up as waste, these reductions in plastic waste follow from the reduction in plastics use driven mostly by policies to restrain plastics demand; extension of product lifespans further postpones waste generation.

Overall, the three pillars of the Regional Action policy package are projected to reduce mismanaged waste by more than half (-63%), reaching 59 Mt by 2060, instead of 153 Mt in the Baseline (Panel C in Figure 7.3). This is 26% lower than the 79 Mt in 2019. The policies to restrain demand reduce the scale of the waste management problem, avoiding 26 Mt of mismanaged waste, but do nothing to decrease the share of waste that is mismanaged. Adding policies to enhance recycling take out another 34 Mt, including those that improve waste collection and sorting to increase recycling rates. Finally, closing leakage pathways by implementing waste management policies to increase the use of sanitary landfills, rather than dumpsites, reduce mismanaged waste by another 34 Mt. However, there are significant interaction effects at play here: when total waste is already reduced by the “restrain demand” pillar, and larger shares of waste are recycled due to the policies in the “enhance recycling” pillar, there is relatively little scope to also avoid mismanaged waste by closing leakage pathways. Alternatively, relying solely on closing leakage pathways as a stand-alone policy, and not implementing the policies in the other pillars, could avoid 73 Mt of mismanaged waste (Box 7.2), but would require significantly higher waste treatment investment. Thus, the third pillar can be quite effective, but the need for waste management investment is lower when the other pillars are also implemented.

Plastics use and waste are projected to still more than double by 2060 in the Regional Action scenario, compared to 2019, despite the implemented policies. Two key elements play a role here. First, population and economic growth, as well as regional development, imply a significant increase in plastics use in the Baseline scenario. Although the Regional Action scenario achieves a partial decoupling of plastics use from economic growth, this does not necessarily imply a reduction in plastics use in absolute terms. Second, plastics are an important input for many economic activities, and avoiding all mismanaged waste through upstream demand policies only would be very difficult and costly to achieve. It is cheaper to combine policies to restrain demand with policies that boost recycling and ensure that remaining waste is managed properly.

Mismanaged waste is projected to be reduced from 2019 levels, implying an absolute decoupling of mismanaged waste from economic activity. This decrease in mismanaged waste results in lower plastic leakage to the environment, despite a continued growth in plastics use and total waste levels.

The introduction of the Regional Action policy package is projected to curb the growth of plastics use in all regions (Figure 7.5). By 2060 in OECD countries, plastics use is projected to fall by 16% (69 Mt) compared to the Baseline, and by 18% (144 Mt) in non-OECD countries. But the time profile of plastics use reductions is different: in the OECD regions, action in the Regional Action scenario occurs in the short to medium term, and most policies are assumed to be fully in place by 2040. Thus, plastics use declines by 14-17% below Baseline levels by 2040 (reflecting a small increase in absolute levels, as plastics use increases significantly in the Baseline). After 2040, no further decoupling takes place and the difference with the Baseline remains constant. In contrast, the policies in non-OECD countries are assumed to be implemented more gradually, leading to a slower but steadier reduction in plastics use from the Baseline. The exception is the non-OECD European Union group of countries , which are assumed to adopt the same high plastic packaging tax as the OECD EU Member States, causing significant reductions in the use of plastics for packaging in that region.

Given the rapid growth of Baseline plastics use, this still represents an increase in absolute levels of plastics use compared to 2019, in line with the discussion above. Outside the OECD, the most significant reductions below the Baseline are projected for the regions that have a high plastics-intensity (see Table 2.4 in OECD (2022[1])).2 Sub-Saharan Africa (Other Africa) and Other Eurasia realise a 26% and 24% reduction below Baseline levels, respectively. In these regions, the high volume of plastics use for every dollar of commodity production implies that a tax of USD 1 000 per tonne translates into a relatively strong increase in the price of plastics inputs in production, thus driving a stronger substitution away from plastics inputs (as well as a loss of competitive position in these commodities on the global market).3 As a result, these regions lower their plastics use below the Baseline trajectory at similar levels to OECD countries by 2030, and beyond them by 2060.

The implementation of the policy package causes the price of plastics to rise, altering production and consumption patterns and driving substitution by paper or glass, where available and economically feasible. Furthermore, as plastics-intensive sectors (such as motor vehicles) pass on their rising production costs to consumers, consumption shifts away from these sectors. Plastics demand declines more in the most plastics-intensive sectors (Figure 7.6). A particular case is business services, which includes accommodation and food services, as well as wholesale and retail trade, insurance and real estate. This sector does not have a very high plastics-intensity but is very large and thus uses very large amounts of plastics (not least in food services and trade) and are projected to decrease plastics demand by 75 Mt (22%) in 2060 compared to the Baseline. Motor vehicles, construction and food products (including packaging) follow. For motor vehicles, the economic impact on OECD countries is projected to be relatively small, as changes in competitive position induce a shift in production towards OECD countries, as their use of plastics makes up a relatively small share of total car manufacturing production costs, when compared to car manufacturing in non-OECD countries.

The Regional Action scenario will result in a strong rise in secondary plastics use (Figure 7.7), with their 2060 share increasing to 29% from 12% in the Baseline and 6% in 2019. This reflects a more than tenfold increase in the global amount of secondary plastics use from 2019 levels (from 29 Mt to 297 Mt). However, the increase in secondary plastics is not strong enough to satisfy the full increase in plastics demand, and primary plastics continue to grow, albeit much more slowly than in the Baseline (on average 1.3% per year versus 2.3% in the Baseline). However, as secondary production starts from a much smaller base in 2019, the absolute increase in primary plastics between 2019 and 2060 (291 Mt) is still larger than the corresponding increase in secondary plastics use (268 Mt).

Secondary plastics production is affected by interactions among the three pillars. On one hand, the taxes on plastics in the “restrain demand” pillar reduce secondary plastics use. On the other hand, secondary plastics require scrap as input, which is generated by recycling plastic waste, which is boosted by the “enhance recycling” pillar. By reducing the amount of plastic waste, less scrap will be available for secondary production. The different pillars work in tandem as a ‘push-pull’ set of measures to stimulate secondary plastics markets: the recycled content targets boost demand for scrap (pull), while the recycling policies boost supply (push).

The evolution of plastic waste generation largely follows the evolution of plastics use (Figure 7.8). At the global level both decline by around 18% compared to the Baseline scenario, while still more than doubling in absolute levels compared to 2019. Given the short lifespan of many plastics applications, and the large impact of plastic taxes on packaging, the lag between the effects on plastics use and plastic waste is fairly short on average. With stronger action in OECD countries, these effects are more visible in the OECD than in non-OECD countries.

In the first years after the policy package is introduced, the emphasis on taxing single-use plastics leads to more significant reductions in plastics use for applications with short lifespans. Thus, plastic waste declines more rapidly than plastics use compared to the Baseline. After 2030, when the policies that prolong lifespans start to kick in, more plastics are retained in the economy, and the reductions in plastic waste stall.

The extension of product lifespans as part of the “restrain demand” pillar delays the generation of waste. Applications for which plastics last longer before being discarded, such as building and construction, industrial machinery and transportation, will see longer extensions, while short-lived products such as packaging and personal care products are projected to have shorter lifespan extensions.4 As a result, at least for a transitory period, waste generation is substantially postponed as the lifespans of applications are gradually prolonged as a result of the policy package. However, all plastics eventually become waste in the long run.

Overall, the full package is projected to increase recycled plastic waste by 162 Mt in 2060 compared to the Baseline, while reducing mismanaged waste by 94 Mt (Figure 7.9). The policy package affects waste management, and therefore the amount of recycled and mismanaged waste, through two channels: (i) by altering the amount of waste generated (the “restrain demand” pillar); and (ii) by improving the way waste is treated (the “enhance recycling” and “close leakage pathways” pillars). Both channels ultimately result in less mismanaged waste, but only the latter boosts recycled plastics. As shown in Figure 7.9, the “restrain demand” pillar (second column) reduces mismanaged waste by 25 Mt in 2060 compared to the Baseline but does not directly boost recycling; therefore total recycling quantities decrease more or less in proportion to the change in total waste generation. The policies in the “enhance recycling” pillar significantly boost the share of recycling (from 17% to 40%, i.e. an increase of 188 Mt); consequently, these policies reduce mismanaged waste by another 34 Mt. Lastly, the “close leakage pathways” pillar (added in the last step) is projected to decrease the share of mismanaged waste by another 34 Mt in 2060. Thus, the overall result of the full Regional Action package (fourth column) is to reduce mismanaged waste from 153 Mt in the Baseline to 59 Mt (a decline of 94 Mt), while increasing recycling from 176 Mt in 2060 in the Baseline to 338 Mt (+162 Mt) in the policy scenario, representing a substantially larger piece of a substantially smaller pie.

Overall, the share of plastic waste that is recycled, a measure of circularity, increases from 9% in 2019 to 17% in 2060 in the Baseline scenario and 40% in the Regional Action scenario. This implies a significant improvement in the circularity of the economy, but is far from sufficient to avoid further growth in the use of primary plastics in production.

The decrease in mismanaged waste is mostly driven by changes in non-OECD countries (Figure 7.10). In OECD countries in the Baseline scenario, mismanaged waste declines to 2060 driven by existing policies. The Regional Action policies have limited effect in the OECD on average, reducing mismanaged waste from 4.5 Mt in the Baseline to 2.3 Mt in 2060, as the levels of mismanaged waste are already projected to be low in the Baseline scenario. By far the largest reduction is achieved in Other OECD America, which has a higher share of mismanaged waste in the Baseline scenario than other OECD regions. In contrast, in non-OECD countries, while the picture is more mixed across individual countries, on balance there is a significant increase in mismanaged waste in the Baseline scenario. As non-OECD countries already account for 88% of global mismanaged waste in 2019, this difference in regional performance will grow wider over time unless more stringent global policies are introduced. As a result of the Regional Action scenario, non-OECD countries will exhibit a significant decline in mismanaged waste, falling to 56 Mt (-62%) in 2060 from 148 Mt in the Baseline.

Importantly, this also implies a significant drop in the total amount of global mismanaged waste compared to 2019 levels: from 79 Mt to 59 Mt. However, while the policy package in the Regional Action scenario does prevent any further growth in the coming decades and roughly stabilises mismanaged waste levels over time,5 it does not eliminate mismanaged waste entirely.

The Regional Action scenario substantially curbs the leakage of plastics to the environment (Figure 7.11.). By 2060, global annual plastic leakage to the environment is projected to decrease by 55% compared to the Baseline scenario, from 44 Mt to 20 Mt. All three pillars in the policy package work together to ensure that plastic leakage does not grow, and eventually drops below the 2019 level of 22 Mt. The effectiveness of the pillars in reducing leakage is linked to their impact on curbing mismanaged waste.

The policies that restrain demand and enhance recycling limit the total waste produced and improve waste treatment respectively, thus reducing the amount of mismanaged waste, avoiding 18 Mt of leakage to the environment by 2060. Additional waste management policies aimed at closing leakage pathways explicitly target the reduction of mismanaged waste, further reducing leakage by 6 Mt in 2060 (Figure 7.11). As highlighted in Section 5.2 in Chapter 5, the estimations of leakage are surrounded by considerable uncertainties. However, in terms of percentage reductions, the outcomes are similar as these uncertainties affect both the Baseline and the Regional Action scenarios. In particular, across all estimates the package is expected to more than halve (-52% to -56%) annual plastic leakage to the environments by 2060.

Overall, the Regional Action scenario reduces plastic leakage per capita and further contributes to decoupling leakage from population growth (Figure 7.12, left panel). Plastic leakage per capita is expected to fall below 2019 values for both OECD and non-OECD countries once the policy package kicks in, primarily due to the decline in plastics use and the increase in recycling rates compared to Baseline. But reductions in plastic leakage per capita become even more significant after 2050, reflecting the inertia in the system: policies are gradually ramped up, it takes on average several years before reductions in plastics use translate into reductions of plastic waste, and shares of mismanaged plastic waste only gradually decline. Consequently, the ratio of leakage to plastics use also declines significantly over time (Figure 7.12, middle panel).

Furthermore, the amount of plastics leaked to the environment varies across activities and types of plastic waste. For instance, uncollected litter fully leaks to the environment, while waste collected in open dumps only partially leaks. The policy package achieves significant reductions in the amount of mismanaged waste, but other sources of leakage continue unabated. Especially leakage from microplastics, such as those from wastewater sludge and tyre abrasion, continue to grow. Therefore, the share of microplastics in leakage grows, especially in the longer run (Figure 7.12, right panel).

The Regional Action scenario targets the leakage of macroplastics into the environment,6 which is projected to be 62% lower in 2060 than in the Baseline scenario (falling to 15 Mt, from 38 Mt in the Baseline). Macroplastics make up for 87% (in terms of weight) of plastics leaked to the environment in 2060 in the Baseline scenario. The reduction in leakage of macroplastics is mainly driven by the reductions in mismanaged waste, which is projected to fall by 65% by 2060. Leakage from marine activities, such as ghost fishing gear, also contribute to macroplastic leakage, but are not significantly reduced in the policy scenario. In terms of the regional distribution, the largest absolute reductions in leakage are projected to be in non-OECD countries (23 Mt in 2060, corresponding to -62%), mostly in Sub-Saharan Africa (Other Africa) and the non-OECD Asian regions (Figure 7.13). These reductions largely follow the reductions in mismanaged waste (Figure 7.10). In relative terms, reductions in total plastics leakage are projected to be limited in most OECD countries, except for Other OECD America, where mismanaged waste is stable at fairly high levels in the Baseline scenario, but reduced to almost zero in the policy scenario, leading to a large percentage decline in leakage. Reductions tend to be larger in most non-OECD regions, except for Other EU, which experiences a similar trend as OECD countries as they have rapidly reducing shares of mismanaged waste already in the Baseline scenario.

Leakage of microplastics into the environment is also projected to decrease in the Regional Action scenario, albeit by only 4% (to 5.6 Mt, from 5.8 Mt in the Baseline scenario), and with the largest reductions occurring in OECD countries. This result reflects more on the lack of policies to reduce microplastics considered in the package than a fundamental inability to reduce microplastic leakage. The reductions that do occur are mostly driven by the lower use of all plastics in the economy, which will reduce microplastics leaking from primary pellets, wastewater sludge and road markings. These results, which do not reflect the additional microplastics from the degradation of leaked macroplastics, highlight that policy measures specifically targeting microplastic leakage to the environment are needed.

Thanks to the overall reduction in plastic leakage to the environment, the Regional Action scenario is projected to also curb plastic leakage to aquatic environments by 2060. In the Baseline, the net inflows into aquatic environments are projected to reach 11.6 Mt in 2060; the Regional Action scenario could reduce these inflows by 60% (a 4.6 Mt reduction in 2060). This decrease is largely driven by policies that directly target waste management and reduce mismanaged waste (Section 7.2) and thus total leakage to the environment.

The largest reductions are projected to occur in non-OECD countries (6.8 Mt below the Baseline projections; Figure 7.14), which are currently – as well as in 2060 in the Baseline scenario – the main contributors to the projected rise in leakage to aquatic environments. Overall, the Regional Action package more than halves leakage to aquatic environments from Sub-Saharan Africa (Other Africa), and the Other non-OECD Asia region, while leakage in India and China are expected to fall by almost two thirds. OECD countries see substantial reductions in leakage to aquatic environments compared to 2019 levels, but a key difference with many non-OECD countries is that – with the exception of Other OECD America – reductions are also foreseen in the Baseline scenario and thus do not rely on the policies in the Regional Action scenario.

The reductions in leakage to aquatic environments caused by the Regional Action policies substantially reduce the plastics accumulated in rivers and the ocean by 2060 compared to the baseline. But until leakage pathways are completely closed and flows fall to zero, accumulated stocks of plastic in rivers and the ocean continue to build up. As it takes 40 years in the Regional Action scenario to reduce mismanaged waste to low levels, significant flows of plastics continue to leak to the environment, with sizable mounts ending up in aquatic environments, especially in non-OECD countries. Consequently, total accumulated plastics in aquatic environments will still almost triple by 2060 in this scenario (Figure 7.15) and reach 388 Mt. These stocks are 105 Mt lower than in the Baseline, where 493 Mt accumulates in rivers and the ocean between 2019 and 2060. More ambitious policy action at the global level, and especially ramping up short-term policy ambitions, is necessary to further reduce plastic leakage to the ocean.

The macroeconomic impacts of the Regional Action scenario are limited.7 The macroeconomic costs are determined through several interacting mechanisms. First, although the fiscal instruments (such as the taxes in the “restrain demand” pillar) increase costs for plastics users, they simultaneously create revenues that can be used to finance public expenditure, such as on waste management. Also, producers faced with increased costs of plastics inputs as a result of these taxes will shift towards other inputs, boosting value added in those activities. The net macroeconomic effect is thus the difference in productivity between these different inputs, rather than the gross value lost in the plastics production sectors.

Second, several policies in the Regional Action package deal with regulations that combine a cost with a benefit for firms and households. For example, the ecodesign policies increase commodity prices but prolong plastics lifespans. Similarly, less frequent replacement of commodities by stimulating repair leads to value creation in the repair sector.8 Such instruments largely entail a shift in expenditures while the macroeconomic effects are very limited overall. The macroeconomic effects of such shifts are determined by the difference in productivity between the sectors (plus some indirect effects from changing prices etc.). For instance, if repair services have a higher productivity than the production of consumer goods, then increased repair can boost GDP even if it leads to reduced demand for consumer products. The EPR instrument in the “enhance recycling” pillar entails a cost for producers, but creates an income source for the waste management sector that carries out the waste collection.

Third, the “enhance recycling” and “close leakage pathways” pillars imply additional investments in waste collection, sorting and treatment. These investment costs can be significant, although it is again the cost difference that is relevant: waste that is incinerated in the Baseline but recycled in the Regional Action scenario entails recycling costs, but simultaneously generates cost savings from avoiding incineration. Furthermore, investment is an economic activity that generates value added and thus contributes to GDP: new value added is created in recycling activities and – where relevant – in construction.

Fourth, the increase in waste management costs is moderated by the reduction in waste generated compared to the Baseline scenario. As overall plastic waste declines in the Regional Action scenario – at least compared to the Baseline projection – a higher treatment share for recycling and landfilling to reduce mismanaged waste does not translate proportionately into higher investment costs.

Overall, while these marginal shifts in economic activity and increases in waste management expenditures do have a macroeconomic cost, this macroeconomic impact is much smaller than a partial accounting of gross implementation costs would suggest. Compared to the Baseline projection, GDP (measured in constant prices using purchasing power parities as exchange rates) is projected to decrease by 0.3% globally (Figure 7.16). This equals more than USD 1.4 trillion, and reflects value added that is not generated in the policy scenario.

The macroeconomic costs of implementing the policies are below 1% in most regions. Overall, the implementation of the Regional Action policy package will curb plastics use, and waste, at moderate economic costs. As plastics use decreases more than GDP, plastics intensity (the ratio of the two) drops substantially across regions.

In the short run, as the policies gradually ramp up, the costs associated with the policies are small. In some cases they can actually boost GDP, when economic activity shifts towards more productive activities, as discussed above. Over time, the impact of the policy package on GDP increases as policies are intensified and the effects on the economy, not least on capital stocks, accumulate. Thus GDP levels decline further below the Baseline over time, while still growing in absolute values.

Furthermore, some non-OECD countries, most notably China, can benefit from an increase in competitiveness vis-à-vis their OECD competitors as the OECD countries accelerate their policies before non-OECD countries, which also have lower targets for some policies. The smaller increase in production costs for exporting sectors in Asia thus improves their competitive position. This causes a small shift in production from OECD to non-OECD – or at least the non-OECD Asian – countries.9 Of all regions, the smallest change in GDP is projected for China, which is projected to be able to increase GDP above Baseline levels by less than 0.1% of GDP. Box 7.3 teases out these trade and competitiveness impacts in more detail.

However, the countries that are most severely affected by the policy package are also outside the OECD (Figure 7.16). The highest costs are projected for the Other EU region (-1.8%), which is assumed to harmonise part of its policy package, notably the packaging plastics tax, the EPR and the recycling rate targets, with the OECD EU countries. As the region has relatively high plastics intensity, this leads to a more significant reduction in economic activity and GDP. The losses in Africa (-1.1%) and non-OECD Eurasia (which includes the Russian Federation; -0.9%) are also relatively large. In these most strongly affected regions, plastics use reductions are also somewhat larger than in other regions. While a higher plastics-intensity of domestic production leads to stronger plastics use reductions from taxing plastics use, it also implies a stronger negative effect on the region’s competitive position. Thus, a substantial part of the costs stems from worsening trade relations rather than from the implementation of the domestic policies.

An essential part of the Regional Action policy package is investing in recycling capacity – including increased waste sorting and recycling – and investing in improved waste treatment – including waste collection and landfilling – to avoid mismanaged waste. The cost of these policy-induced investments, which partially drive the macroeconomic effects on GDP presented above, are calculated by multiplying waste flows with unit treatment costs; they are additional to the investments in waste management in the Baseline scenario, which are projected to increase from around USD 35 bn in 2019 to more than USD 100 bn in 2060.

The investment costs associated with improving recycling and reducing mismanaged waste used in this analysis are based on Soós, Whiteman and Gavgas (2020[8]), who provide harmonised estimates for different waste management solutions. The estimates include labour costs, fixed and variable operating and maintenance costs, and annualised capital costs. Table 7.1 depicts the annualised benchmark costs for each solution and how they map to the waste management categories considered in ENV-Linkages.10

As it is difficult to distinguish plastic waste management from mixed municipal waste systems, estimates of the management costs of the entire municipal solid waste stream are used as a proxy for the unit (per tonne) costs of plastic waste management. The exceptions are plastic waste pre-processing installations that focus on plastic waste only, and sorting facilities for mixed dry recyclables that include only dry waste.

In general, investments required for one tonne of recycling, which include sorting stations for clean recycling and investments in plastics recycling facilities, are larger than the costs of incineration; landfilling is still cheaper. Litter collection is by far the most costly.

The total recycling investments required to achieve the waste treatment levels of the Regional Action scenario are significant in both OECD and non-OECD regions. They are highest in countries that have to handle relatively large amounts of waste (such as China), and in countries where the difference in recycling rates between the Baseline and the Regional Action scenarios is relatively large (such as the USA). Globally, cumulative investments in recycling amount to more than USD 260 billion (Figure 7.18, Panel A). While this amount is not negligible, it is of a similar order of magnitude to the projected annual global expenditures on plastic waste management by 2060 (more than USD 100 bn) in the Baseline scenario and it is spread over several decades. In 2060, the projected additional investments required to enhance recycling amount to 22% on average of total plastic waste management costs in OECD countries (ranging between 21 and 28% at regional level; Figure 7.18, Panel B), and 12% in non-OECD countries.

In most OECD countries, the amount of mismanaged waste is very small, and hence the additional investment required in avoiding mismanaged waste is almost negligible (for the OECD group of countries around USD 1 bn over the period 2020-2060). In non-OECD countries, additional investment (almost USD 60 bn above Baseline levels) is needed in the “close leakage pathways” pillar of the Regional Action scenario, with regions with more mismanaged waste in 2060 in the Baseline having higher costs (Figure 7.18). The combined investments for recycling and reducing mismanaged waste in non-OECD countries amount to USD 160 bn. One quarter of that (USD 36 bn) is needed to improve waste management systems in Africa. The combination of the current low expenditure on waste treatment and high investment needs for both recycling and avoiding mismanaged waste imply that the additional average annual investment costs in the Regional Action scenario amount to around 35% of total annual waste management costs in Africa.


[6] Cottom, J. et al. (2022), “Spatio-temporal quantification of plastic pollution origins and transportation (SPOT)” University of Leeds, UK, https://plasticpollution.leeds.ac.uk/toolkits/spot/.

[4] European Commission (2014), “Development of Guidance on Extended Producer Responsibility (EPR)”, European Commission - DG Environment, https://ec.europa.eu/environment/archives/waste/eu_guidance/pdf/Guidance%20on%20EPR%20-%20Final%20Report.pdf.

[2] Laubinger, F. et al. (2021), “Modulated fees for Extended Producer Responsibility schemes (EPR)”, OECD Environment Working Papers, No. 184, OECD Publishing, Paris, https://doi.org/10.1787/2a42f54b-en.

[7] Lebreton, L. and A. Andrady (2019), “Future scenarios of global plastic waste generation and disposal”, Palgrave Communications, Vol. 5/1, p. 6, https://doi.org/10.1057/s41599-018-0212-7.

[1] OECD (2022), Global Plastics Outlook: Economic Drivers, Environmental Impacts and Policy Options, OECD Publishing, Paris, https://doi.org/10.1787/de747aef-en.

[10] Pfaff-Simoneit, W. (2013), Entwicklung eines sektoralen Ansatzes zum Aufbau von nachhaltigen Abfallwirtschaftsystemen in Entwicklungsländern vor dem Hintergrund von Klimawandel und Ressourcenverknappung [In German]., Universität Rostock, Darmstadt/ Rostock, http://rosdok.uni-rostock.de/file/rosdok_disshab_0000000936/rosdok_derivate_0000005003/Dissertation_Pfaff-Simoneit_2013.pdf.

[5] Ryberg, M. et al. (2019), “Global environmental losses of plastics across their value chains”, Resources, Conservation and Recycling, Vol. 151, p. 104459, https://doi.org/10.1016/j.resconrec.2019.104459.

[8] Soós, R., A. Whiteman and G. Gavgas (2020), The cost of preventing ocean plastic pollution, OECD Environment Directorate, Working Party for Resource Productivity and Waste.

[9] UNEP and ISWA (2015), Global Waste Management Outlook, UN Environment Programme, https://www.unep.org/resources/report/global-waste-management-outlook.

[3] Watkins, E. et al. (2017), “EPR in the EU Plastics Strategy and the Circular Economy: A focus on plastic packaging”, Institute European Environmental Policy.

[11] WRAP (2021), Financial Cost of Packaging Litter – Phase 2 – Final Report, Prepared by Chiarina Darrah, Leyla Lugal, Paul Marsh, Kathryn Firth, Vera Lahme and Gemma Darwin.


← 1. For comparison, the EU tax on non-recycled plastics amounts to EUR 800 per tonne (https://ec.europa.eu/environment/topics/plastics/single-use-plastics_en), which is a little less than the USD 1000 per tonne assumed in the modelling; the exact specification of which streams exactly fall under the tax are also somewhat different, most notably the tax in the Regional Action scenario covers all packaging plastics, not only non-recycled plastics.

← 2. The exception is China, that has a high plastics intensity in 2019, but that is projected to reduce this intensity over time; in contrast, in Other Africa and Other Eurasia the plastics intensity increases over time (see Chapter 3).

← 3. The high plastics intensity at the sectoral level does not translate into a high plastics intensity at the national level, as plastics-intense sectors represent a fairly small share of total regional production.

← 4. Under the assumption of a 10% increase in product lifespans, building and construction products would last an additional 3.5 years on average, while packaging and personal care product lifespans would be extended by less than a month.

← 5. The time profile of global mismanaged waste in the policy scenario is not uniform over time: it gradually increases until around 2040 after which the effects of the policies become dominant, leading to declining mismanaged waste levels.

← 6. The Regional Action policy package does not include instruments that specifically target microplastics due to lack of data on costs, such as costs necessary to reduce emissions at source and to improve the end-of-pipe capture of microplastics before they enter the environment.

← 7. Importantly, the analysis here only includes the direct economic costs and abstracts from changes in damage from environmental degradation. The economic benefits from reduced leakage of plastics to the environment are not monetised.

← 8. Motor vehicle repair services are included in the model in the wholesale and retail trade sector; other repair services are included in “other commercial services”.

← 9. The model assumes that exchange rates adjust to ensure that trade balances remain at their Baseline level. Thus, aggregate exports and imports must move together.

← 10. Unfortunately, the available data do not allow a robust regional differentiation of these costs.

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